24 October 1929 was a fateful day in the
history of the world. This was the day of the Wall Street Crash. The value of
shares on the American stock market collapsed. People tried frantically sell
their shares before the prices fell even further. In one day no fewer than 13
million shares were sold. This was the start of an economic crisis that
devastated the whole world.

What were the political consequences of the
Depression?

The depression began with the Wall Street
Crash. This was a collapse of confidence among American investors. After Wall
Street there was a dramatic slump in the USA. This had catastrophic results for
the world economy. The world economy depended on the USA.

After Wall Street there was a worldwide
economic crisis. Governments turned to protectionism: they imposed high import
taxes to protect their own industries. This resulted in a further decline in
world trade and widespread unemployment.

The Depression and the USA

In the years before 1929 the American economy
had grown at a dramatic rate. The USA was by far the most important
manufacturing country in the world. On the eve of the Depression, the USA was
producing 4.5 million cars a year, while Germany, Britain and France made less
than half a million cars between them. Taken together, Britain, France,
Germany, Italy, Japan and the USSR produced fewer manufacturing goods than the
USA did by itself.

The national income of the USA fell by nearly
a half between 1929 and 1932. American factories, which had become so
successful, suddenly fell silent. Exports of cars fell from $541 million in
1929 to $76 million in 1932. Farmers were also badly hit: wheat exports fell
from $200 million to a mere $5 million in 1932.

Isolationism

American foreign policy had been isolationist
before the Depression. The US government became even more isolationist after
1929. Politicians were more interested in rebuilding the American economy.

In 1932 a new President was elected: F. D.
Roosevelt. Under Roosevelt policy became even more isolationist. Roosevelt
called for a New Deal for America. This New Deal policy was based on government
spending on public projects and government help for businesses and farmers.
Roosevelt needed the support of extreme isolationists in the US Congress to get
support for his New Deal.

America and the dictators

Lacking support from Washington, the leaders
of France and Britain were encouraged to be cautious towards the dictators.
Many American politicians said that America should be neutral if there was ever
another war in Europe. This encouraged Hitler to think that Germany could be
aggressive without much risk of war with the wealthy USA.

American reluctance to get involved was seen
during the crisis over Abyssinia in 1935. Mussolini was criticized by the US
government for invading this African country but nothing practical was done to
stop him. American companies greatly helped Mussolini by allowing a mass
increase in the sale of American oil to Italy